Washington, D.C. - Chief executives of British Airways and American Airlines shrugged off concerns of excess transatlantic capacity, saying capacity growth is well-matched to demand.
Speaking here earlier this month to update the carriers' Atlantic joint business agreement, British Airways' parent company, International Airlines Group's CEO Willie Walsh said he has "no concerns" about overcapacity on transatlantic routes, despite warnings voiced by some analysts and carriers. Those concerns, he said, stem largely from capacity growth among a few select routes in continental Europe, many of which are undergoing trimming.
"We look at U.S. GDP, which is growing much stronger than we have expected, and at U.K. GDP," Walsh said. "So, if you look at our principal points of operation, we have strong, underlying demand, and if you look at London, it's even stronger."
Some capacity growth, meanwhile, includes adding such new markets as Austin, to which British Airways added a direct flight in March. Those add travelers without "cannibalizing our network," he said.
"What you really don't like to see is demand shrinking, and that's not the case," American Airlines CEO Doug Parker said. "Capacity has been added, and demand hasn't grown at the same rate, but those are issues we can manage over time."
Both Parker and Walsh said they were not particularly worried about competition from Middle Eastern carriers eroding capacity, at least in the short-term. Walsh said the ability to match the joint venture's network "is going to take years and years and years," though Parker added that their quickly growing fleet was a cause of some concern.
"Soon, we're going to have flying into Dallas/Fort Worth one 380 and two 777s from the Middle East, and there clearly is not demand for that much travel from Dallas/Fort Worth to the Middle East, certainly not on a nonstop basis," Parker said. "Fortunately, most of that connects onto places we don't take a lot of, but there's some concern of diverting traffic that would have gone elsewhere. When you have that much capacity flying, the fares will be so extraordinarily low."
The joint-business agreement itself, which also includes fellow IAG company Iberia as a founding member, itself has grown significantly since its 2010 start. Two carriers since have been integrated—Finnair and, as a result of its merger with American, US Airways—and the number of routes has grown from 50 to 88.
Both CEOs expressed satisfaction with the joint venture's effects on their respective carriers. Walsh said that over its life and buoyed by Oneworld, British Airways has increased its premium market share about 10 points.
"The corporates we talk to are much happier being able to deal with a joint business," he said. "They're looking for global access, which we weren't able to offer as individual carriers."
He added that he particularly would like to add a partner in China and has been talking to a "number of the Chinese carriers" about code-sharing agreements, although "we don't see any of these carriers joining an alliance."
During the press event here, the two CEOs also answered questions related to the Ebola virus. Both said they will remain in close contact with government health agencies regarding policies but, so far, they have seen little effect on air travel demand as a result of concerns about the deadly disease.
British Airways in August ceased flights to Sierra Leone and Liberia, both of which are at the center of Africa's rising Ebola death toll, but Walsh said that was "very much a commercial decision" related to the effects on demand, not a decision based on health concerns.
"Obviously we look at these issues very carefully and take advice from the health experts, but my understanding today is the risk of transmission remains very low," Walsh said. "It's clearly impacting the affected countries, but we're seeing no change in booking patterns."